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Borrowing problems on ‘free’ solar panel properties

Rent-a-roof schemes rebuffed by some lenders

Solar panels on a roof

Some mortgage providers may reluctant to lend on properties with ‘free’ solar panels

Homeowners who want to install solar panels for ‘free’ on their roof could see them struggle to secure a new mortgage on their property.

New research from Which? Money has found some of the UK’s largest mortgage lenders, including Lloyds Banking Group and Royal Bank of Scotland, could be unwilling to lend against homes when homeowners want to install free, or rent-a-roof, solar panels.

Minimum requirements need to be met

We asked the UK’s 10 largest mortgage lenders about their policies on homes fitted with solar panels. Most lenders said applications for solar schemes, purchased upfront or leased, would be accepted as long as the panels meet the Council of Mortgage Lenders’ (CML) minimum requirements.

These include making installers obtain all necessary consents, including the lender’s consent, and carrying out the work to an accredited standard. 

The CML requirements also seek to ensure there are no other conditions affecting the value, marketability or sale price of the property and state the lender can have the panels removed without charge if the property is taken into possession during the period of the leasehold agreement and the installation of panels is deemed to have affected attempts to sell the property, or its re-sale value.

Mortgage lenders’ differing opinions

However, Lloyds Banking Groups said it is only willing to lend on properties when free solar panels are installed by one of its approved providers – at the last count there were 75 firms on that list.

Royal Bank of Scotland said it usually approves all mortgages for homes with solar panels bought upfront, where not lease is involved, but it reserves the right to refuse applications for free schemes.

Yorkshire Building Society is the only lender which considers all applications for solar panels – both leased and bought upfront – on a case-by-case basis.

An individual lenders stance on remortgaging is similar to its stance on the initial application for ‘free’ schemes.

What are ‘free’ solar panel schemes?

Free, or rent-a-roof, solar schemes allow people to benefit from lower electricity bills by having panels installed at no cost, but their roof is then leased to a solar company, typically for 25 years. Solar firms then profit from exporting the power the panels generate back to the grid and earning money from the government’s feed-in tariff (FIT).

Which? believes that you should think carefully before entering into a ‘free’ solar scheme. We recommend you get independent legal advice on the details of the contract. You should consider who owns the system, what happens if you want to end the contract early, who is liable for damage, who pays for insurance, upkeep and repairs, and what happens if you move house.

Which? also thinks that the profits from rent-a-roof schemes should be shared more fairly between the rent-a-roof company and the householder. We are also concerned that cash intended for householders is going elsewhere.

If you are considering installing solar panels on your property, contact your mortgage lender before proceeding.

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